The market sentiment was also affected on weakening Asian trend and a lower opening in Europe on reports of downgrading of credit ratings on five Spanish regions.

The Sensex, which had gained 111 points in the previous session, commenced the day better at 18,812.93 but met with profit selling at higher levels. It closed 83.42 points, or 0.44 percent, lower at 18,710.02.

The 50-share National Stock Exchange index Nifty lost 25.75 points, or 0.45 percent, to end below 5,700 level at 5,691.40.

Brokers said investors were seen taking profits before a market holiday tomorrow and and winding up their pending positions ahead of the expiry of October month contract in the derivatives segment.

"Market breadth was negative and volumes were lower than last trading session. European indices were also negative and Dow futures also showed mixed cues. This also underpinned the negative sentiment," said Nidhi Sarswat, Senior Research Analyst, Bonanza Portfolio.